Maybe Shift Cd Into Annuities

Your Money - Money Matters Q&A

QUESTION: I am 76 years old, and my husband is 85. We have two certificates of deposit coming due this year. Rates are down and we would like a better return.

Should we invest in stocks? The amount in the CDs is $135,000, and we need more income.

E.S., Orlando

ANSWER: If you do not need to take on risk you should not do so just to possibly get a better return. You may want to have an asset allocation done to help you pick better choices than CDs.

A fixed annuity may be a good option. Another option would be a portfolio of bonds. A third option might be to put a portion of the money in a REIT, or real estate investment trust.

WALTER RENTZ, CFP

Q: I have an individual retirement account with a financial adviser. I am unhappy with this adviser and want to transfer the account to someone else. Will I be taxed on this transfer?

P.W.

A: If you are in an IRA you have the ability to do a tax-free transfer to another adviser and/or another company.

If you switch advisers be careful to evaluate your current investments before changing the investments themselves.

In other words, just because you change advisers your investment portfolio may be worth keeping.

Oftentimes it does not make sense to sell investments and repurchase into different investments.

Tom Ruggie, CFP

Q: I have a first mortgage with an interest rate of 7.125 percent and a second mortgage with a rate of 8.769 percent.

My home equity is more than 20 percent and I am retiring in eight years.

I am actively investing for retirement. Should I refinance my mortgage and accelerate paying off the loan?

N.F., Orlando

A: Interest rates on mortgages are extremely low right now. If you can consolidate both loans into one first mortgage at 7 percent or less and you plan on staying in your house for a few more years I think refinancing is a great option.

As for accelerating mortgage payments, that depends on your tax situation and other investments.

If you are able to deduct your home mortgage interest and can invest your extra money in a portfolio with a rate of return higher than your mortgage interest rate, I would choose that over accelerating your mortgage payment.

Anthony Rossetti, CFP

Q: I am a 53-year-old divorced woman with equity in my home.

I'm having problems keeping up with my monthly expenses. Should I consider a reverse mortgage?

N.P., Winter Park

A: A reverse mortgage typically works better for older people.

The lender would give you a monthly income and that loan would accrue interest until you die or move. The loan is paid off when the house is sold. Any remaining equity would be paid to you or your estate.

At 53 years old, you should be building equity for retirement, not destroying it.